Reuters: India turns to Russian energy as global supply chains shift

India has significantly increased its imports of Russian crude oil and coal, strengthening energy ties with Moscow after disruptions to global supply chains and rising prices during the Iran conflict, Reuters reports.

The world’s third-largest oil importer is expected to see Russian crude arrivals surge to a record 2.55 million barrels per day (bpd) in June, according to data compiled by commodity analysts Kpler.

June’s imports from Russia would be up from 2.13 million bpd in May, which was the third-highest on record and just behind 2.16 million bpd recorded in May 2023.

Russia’s share of India’s total crude imports of 5.29 million bpd in June is expected to reach just under 50%, a sharp rise from an average 23% share in the three months prior to the start of the war on February 28, when the United States and Israel launched an aerial campaign against Iran.

India’s pivot toward Russian crude followed a temporary waiver by the administration of US President Donald Trump on sanctions related to Russian oil purchases, introduced to stabilize supplies after Iran effectively closed the Strait of Hormuz in response to the strikes. The waiver expired on June 17 and was not extended by the US Treasury.

While this raises the possibility of reduced Russian imports going forward, analysts say the outcome will depend on whether Indian authorities and refiners regain confidence in Middle Eastern supply routes.

India has already reduced imports from some Gulf producers, with shipments from Saudi Arabia forecast at 349,000 bpd in June, down from 832,000 bpd in the three months before the conflict.

Alongside crude oil, India has also sharply increased coal imports from Russia.

The country is on track to import 3.16 million metric tons of all grades of coal from Russia in June, slightly below May’s 3.27 million tons but still among the highest levels on record.

These two months rank as the second- and third-strongest on record, behind 3.76 million tons in May last year, with June imports 51% above the average of the three months preceding the conflict.

Russia is set to overtake Australia as the second-largest coal supplier to India in June, as New Delhi diversifies its energy sourcing.

Metallurgical coal imports, used in steel production, have also increased sharply. India imported 2.02 million tons of Russian metallurgical coal in May, the second-highest level on record.

Australia also recorded strong shipments to India in May at 4.05 million tons, the highest since July last year, helping push total metallurgical coal imports to a record 8.05 million tons.

India’s steel production is projected to rise significantly, from about 168 million tons annually to 400 million tons by 2035, with around 25 million tons of new capacity expected this year alone.

While India has large reserves of thermal coal for power generation, its metallurgical coal production remains limited and of lower quality, making imports from suppliers such as Australia, Russia, the United States, and Mozambique essential.

As a result, India is expected to continue increasing metallurgical coal imports and diversify its supplier base to reduce dependence on Australia.

Overall, Russia is likely to remain a key energy supplier for India, with future crude oil purchases partly dependent on whether the United States reimposes or enforces sanctions pressure on Moscow.

By Vafa Guliyeva